The transition to digital cinema is a reality, but so are the conversion costs for an exhibitor. That’s why Sony has put in place a menu of flexible purchase and financing options for exhibitors in North America that can make converting to digital easier and more affordable. Sony also offers a full range of programs for exhibitors in other countries, with options and benefits varying by region. Tac Sugiyama, Sony Electronics’ director, business development, digital cinema solutions, shares the details of their program in this Q&A with Film Journal International.

What are Sony’s three purchasing options available to exhibitors?
First, Sony offers an industry-unique 10-year operating lease, with a very low initial payment bringing numerous tax and balance-sheet benefits. Second, for exhibitors who are net tax payers, we offer an administration agreement to manage VPF [Virtual Print Fee] studio payments on systems owned by the exhibitors—which may maximize available IRS programs on bonus depreciation. Finally, exhibitors may purchase systems outright.

What are the benefits of the exhibitor-managed program?
In both the lease and exhibitor-managed programs, the film studios subsidize not only the projectors, but also the library servers/networks, 10-year parts warranty, shipping costs and Theater Management Software. Exhibitors installing Sony 4K through the exhibitor-managed program get certainty of ownership costs combined with the ability to potentially take advantage of IRS bonus depreciation programs.

What are the benefits of the leasing program?
Exhibitors essentially enter into a 10-year operating lease arrangement with Sony with a one-time exhibitor contribution. Many exhibitors are able to treat this payment as an operating lease on their balance sheet, with the ability to distribute that cost across the term of the agreement. Through this lease, Sony is providing interest-free financing and sales tax, where applicable, which is charged only on the one-time lease payment, rather than the total value of the system. The lease can be assignable in the event that a complex is sold or closed; in many cases, pre-deployed Sony systems and non-Sony systems can be included under the lease to take advantage of the studio subsidy. All of these terms require credit approval and exhibitors should work with their tax advisors to understand and maximize the value of the lease.

What makes Sony’s VPF model a complete turnkey solution?
The Sony model is designed to be the most comprehensive VPF offering on the market. The package includes Sony’s fully DCI-compliant system (4K projector, 2D lens, screen server/media block, Screen Management and Theater Management software, central server and storage network, 10-year parts warranty, two-year labor warranty, 24/7 help desk, Cinewatch remote system monitoring), along with shipping costs and installation. There are also options available to extend the labor warranty to a full ten years as well as to provide preventative maintenance services.

How does Sony’s VPF simplify an exhibitor’s conversion to digital?
Sony’s VPF model is designed to be customizable to fit an individual operation’s financial needs as well as its timeline for converting to digital. Sony will work with an exhibitor along the entire process of digital conversion, to ensure that all the exhibitor’s needs are being met at every step.

How extensive is Sony’s VPF model?
Sony has deployed systems under studio VPF agreements with exhibitors of all sizes across several countries. Payment agreements are in place with all six major U.S. studios for a variety of territories, as well as more than 100 independent studios worldwide.

How does Sony’s range of purchasing options, including VPFs, expand Sony’s full-service solutions offering for exhibitors?
These VPF and finance options are just one component of Sony’s full range of technology solutions for digital cinema, including remote monitoring, 24/7 Network Operations Center and help desk, digital menu board and box-office signage, video surveillance, and much more. Future Sony alternative-content offerings will bring additional value to exhibitors.